MANILA (Reuters) - The Philippines’ two main telecoms firms together agreed to buy conglomerate San Miguel Corp (SMC.PS) out of the sector for $1.5 billion, pledging to invest heavily to boost snail-pace internet service in the country’s biggest deal in nearly three years.

A logo of Philippine Long Distance Telephone Company (PLDT) is seen in front of their building in Makati city, metro Manila, Philippines May 30, 2016. REUTERS/Romeo Ranoco

Shares in both Philippine Long Distance Telephone Co (PLDT) (TEL.PS) and Globe Telecom Inc (GLO.PS) jumped after they said they will buy San Miguel’s telecoms units in a 50-50 purchase valued at 69.1 billion pesos ($1.48 billion). The pair will finance the deal via debt and asset sales.

San Miguel’s move to pull out of what was a fledgling business for the food-to-power group is subject to regulatory clearance and comes more than two months after talks on a joint venture with Australia’s Telstra Corp Ltd (TLS.AX) collapsed. San Miguel said it plans to allocate proceeds to other infrastructure projects.

The deal also follows hard on the heels of president-elect Rodrigo Duterte’s warning that he may ease rules on foreign ownership of firms to stoke one of Asia’s fastest-growing economies, plagued by chronically slow web speeds. But it also cements the grip of a pair that effectively control all of a market worth about $6 billion by annual revenue, raising the bar for potential new entrants.

“It’s not that easy to come in,” Wilson Sy, director of Manila-based fund manager Philequity Management Inc. “Capital expenditure is so huge...Additional players will find it difficult versus those who are entrenched.”

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Under terms of the deal, PLDT and Globe will acquire a 700 Mhz spectrum network from San Miguel - prized for its wider reach and compatibility with 4G telecoms services - and said they will return certain other radio frequencies to the government, allowing for a new competitor to begin operations.

While other operators exist in the Philippines, like San Miguel, they have yet to develop active product offerings for customers. Industry experts said the deal effectively sealed the dominance of PLDT and Globe, which now have 57 percent and 43 percent of the wireless market, respectively.

“It will be very difficult for a new player to enter. What (the government) should do is to review all spectrum allocations to reserve space for new players,” Internet Society Philippines chairman Winthrop Yu said.

The Philippine Competition Commission said in response to the deal’s announcement that it will look into the transaction. “The Commission shall assess and take action as appropriate,” the regulator said in a statement.

The Philippines ranked 21st out of 22 Asian countries in terms of internet speed, just ahead of Afghanistan, according to a study by data analytics firm Ookla. The prospect of a much-needed deal to rev up web use sent shares in all three companies sharply higher: PLDT climbed as much as 11 percent, while Globe and San Miguel each jumped more than 6 percent at one point.

While the deal - the largest since JG Summit Holdings Inc (JGS.PS) acquired San Miguel’s shares in Manila Electric Co (MER.PS) for $1.66 bln in October 2013 - is subject to shareholder and regulatory approvals, it won’t require parliamentary clearance, said Ray Espinosa, PLDT’s head of regulatory affairs, speaking during a news conference.